Belarus’s leading supermarket chain Eurotorg (aka Evroopt) confirmed earlier reports that it plans to IPO in London in the near future, in what will be the small republic’s first ever IPO, the company said in a press release issued on October 11.

The company announced it had submitted registration documents to the London Stock Exchange (LSE) on October 4, but has now followed through with a formal announcement of its intention to offer shares for sale.

Eurotorg also announced it was appointing four independent directors to its board to boost its corporate governance.

“Today’s announcement of our intention to proceed to IPO represents another milestone in the history of Eurotorg,” the company’s CEO Andrei Zubkou said in the press release.

“In addition, the appointments we are announcing today represent a significant step in strengthening our corporate governance. The three individuals who have agreed to join the board as independent non-executive directors have outstanding international credentials as directors and senior executives, as well as profound knowledge of the retail industry and of growing global tech and digital businesses, as we continue to develop our market-leading profitable e-commerce operations. We look forward to benefiting from their experience as we seek to create value for all our stakeholders.”

The company’s shares will be offered as Global Depositary Receipts (GDRs) representing the underlying ordinary shares of the company registered in Belarus and will be listed on the LSE.

“The company expects to raise approximately $200mn in primary proceeds to the company. The total offering size is expected to be more than $300mn,” Eurotorg added in its press release. “The company intends to use the net proceeds to partially repay the group’s foreign currency debt, in line with its strategic objective of reducing its foreign currency debt exposure.”

Eurotorg is the largest food retailer in Belarus with around a 20% market share and recently reported strong first half of 2018 results where net profit was up by 16.6% year-on-year to BYN68.7mn ($34.5mn) and the net profit margin ticked up slightly to 3.2%. However, the company has been struggling under a debt burden which it has been at pains to reduce.

Eurotorg, which was facing a very high possibility of default on its debt obligations to local banks, placed $350mn five-year Eurobonds in October 2017. Fitch Ratings has assigned Eurotorg a Long-Term Issuer Default Rating (IDR) of 'B-(EXP)' with a stable outlook. At the same time, Fitch assigned an expected rating of 'B-(EXP)'/'RR4' to Eurotorg's proposed notes.

Successful measures to reduce debt, combined with solid Ebitda growth, helped to improve the net debt/Ebitda ratio to 3.0x as of June 30, compared to 3.2x at the end of 2017. The Ebitda/interest expenses LTM coverage ratio stood at 2.9x as of late June, compared to 2.7x as of late December 2017, the company said in the statement.

“The company expects that the group’s ratio of net debt to LTM Adjusted Ebitda as of 30 June 2018 will decline to below 2.0x,” the press release said.

The main shareholders are intending to partly cash out some of their stock. The secondary component of the offering includes a share offer by the company’s core shareholders, Uladzimir Vasilko, Sergey Litvin, Aleksandr Litvin and Andrei Zubkou, but the core shareholders expect to retain a majority shareholding in the company following the completion of the offering, the company said. The core shareholders have also agreed to a lock up clause preventing them from selling their shares following the IPO: Zubkou’s shares are locked up for a year while the other core shareholders may not sell their shares for 180 days.

The core shareholders will use the proceeds of the IPO to buy the group’s stake in its subsidiary StatusBank, a universal bank with branches in 16 cities across Belarus, as part of the changes for BYN45.2mn ($21mn).

“The transaction shall be subject to the completion of the IPO and customary regulatory approvals. The company expects to use the proceeds from the sale for further deleveraging and reduction of foreign-currency debt,” the company said.

The company expects to publish its operating results for the third quarter and first nine months of 2018 on or around October 18, and the details of the offering, including the offer price, will be published in the coming weeks, Eurotorg said.

The board of Ukraine’s main donor, the International Monetary Fund (IMF) signed off on the badly needed $3.9bn Stand by agreement (SBA) at a meeting on December 18.

Average bribe in Russia is estimated by the Public Prosecution Service at RUB609,000 ($9,000), while the total amount of uncovered bribes in January-September 2018 stood at RUB1.8bn ($26.7mn), as reported by Vedomosti daily.

Analysts think country is undergoing a much harder landing than many people expected. Credit crunch seen morphing from complete shutdown in FX-denominated lending to suppression of TRY lending.

Russia's e-commerce market in 2018 could reach RUB1.5 trillion ($22.8bn), according to the estimates by Data Insight cited by Vedomosti daily on December 17. Sales in Russian online stores are expected to increase by 19% to RUB1.15 trillion

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